Carrizosa and Ryan (2017) explore the use of private information covenants, which contractually oblige borrowers to provide their lenders with private information: projected or intra-quarter financial statements. The authors offer evidence that creditors acquire private information about...

We study the intertemporal properties of accounting conservatism with a focus on managerial incentives. In our main model, conservatism results in smaller expected payouts to the manager (agent) in early periods and larger expected payouts in later periods. Conservatism shifts (ambiguous)...

Using a sample of firms experiencing exogenous CEO departures, we investigate whether firms with overconfident CEOs avoid more tax. We find robust evidence of a positive relation between proxies for corporate tax avoidance and CEO overconfidence. Because our empirical tests use a panel of...

We explore the theoretical relation between earnings and market returns as well as the properties of earnings frequency distributions under the assumption that managers use unbiased accounting information to sequentially decide on real options their firms have and report generated earnings...

Prior research finds conflicting results on the impact of uncertainty on voluntary firm disclosure. Our paper sheds light on this relationship by addressing endogeneity concerns. To this end, we use a novel instrumentation strategy that exploits firms’ differential exposure to aggregate...

Because uncertainties around innovative technologies resolve over time, investments in such technologies are often made in stages so that organizations can use the knowledge gained from earlier stages to decide the next step. Previous studies usually assume that once some uncertainty is...

Recent corporate governance scandals have been attributed to a lack of board independence because of the influence CEOs have over their boards. However, CEOs can also affect board efficacy without compromising its independence by strategically choosing directors. We offer a theoretical framework...

Accounting information provides guidance for real decisions such as whether to liquidate or continue an ongoing project. Ceteris paribus, implementing an accounting system with an aggressive bias leads to inefficient project continuations and causes a higher cost of capital. We show that an...

We examine the influence of common ownership on commonalities in the information environment. Specifically, we study commonalities in financial statements and in the actions of key agents such as financial analysts and firm managers who contribute and respond to the information environment....

We explore the theoretical relation between earnings and market returns as well as the properties of earnings frequency distributions under the assumption that managers use unbiased accounting information to sequentially decide on real options their firms have and report generated earnings...